Poverty Debate Divides Along Political Lines

MANAGUA – Three weeks after the Sandinista government’s claim to battlefield success in the war on poverty, the debate over the socio-economic wellbeing of nearly half of all Nicaraguans continues to divide along political lines.

Presidential adviser Paul Oquist, a U.S. citizen who for some curious reason has become the main government spokesman on the poverty issue – the Sandinista administration’s most important claim to success in the past three years – says the “spectacular reduction” in poverty is thanks to the good governance of his boss, Daniel Ortega.

Citing results from a recent survey conducted by the International Foundation for the Global Economic Challenge (FIDEG), the Sandinista government claims that from 2005 to 2009 the poverty rate in Nicaragua dropped from 48.3 percent to 32.9 percent, while extreme poverty dipped 17.2 percent to 9.7 percent (NT, Sept. 3).

Oquist this week stressed that the Sandinista government has proven it can reduce poverty without economic growth.

The trick, he said, is to combat economic

inequality by designing government policies and social programs aimed at helping the poor.

“From the optic of the Washington Consensus and neoliberalism, economic growth is the motor – the only motor – to reduce poverty,” said Oquist. “But there are other ways to reduce poverty: (such as) by diminishing inequality.”

Despite the administration’s enthusiasm (Oquist last week called on all Nicaraguans to celebrate the reduction in poverty), not all indicators suggest that inequality is being reduced by as much as the government says.

FIDEG Breaks Silence

After a strange two-week silence by FIDEG – even as the Sandinistas claimed the firm’s survey results as a victory for the Ortega administration – the research group finally came forward this week and presented the full results of its poverty investigation.

While FIDEG reaffirmed the government’s claim of a 7.5 percent drop in extreme poverty, many of the other indicators are less worthy of celebration.

Instead of the Sandinistas’ claim that general poverty has been reduced by 15.4 percent, the FIDEG survey shows poverty has fallen by only 3.6 percent. That means that 44.7 percent of the population is still below the poverty line, not 32.9 percent, as the government claimed.

Given the population increase over the past four years, there are now more Nicaraguans living in poverty, not fewer.

The good news, FIDEG pointed out, is that extreme poverty (people who live off less than $1 a day) is on the decline. So a percentage of poor people are less poor today than they were five years ago.

Still, nearly half of Nicaraguans are still struggling to survive on less than $2 a day.

And while the survey – based on the methodology of measuring consumption as an indicator of poverty – shows the gap in consumption between rich and poor has closed somewhat over the past four years, many of the other poverty indicators show just how wide the gap between haves and have-nots really is.

For example, only 53.6 percent of home- owners have title to their property; 41.4 percent of Nicaraguan households have dirt floors; 17.2 percent of the population doesn’t have access to drinking water; more than 40 percent of the population burns their trash; and only 47 percent of rural homes have electricity.

Indeed some of the numbers openly challenge the government’s claims to advances in recent years.

The FIDEG survey showed that illiteracy has diminished slightly, from 18.4 percent in 2005 to 16.2 percent in 2009 – a finding that flies in the face of the Ortega government’s claim to have eradicated illiteracy here (statistically less than 5 percent).

The survey also shows that more Nicaraguans (72.8 percent) are now part of the “informal economy,” and that the country will most likely fall short of its millennium goal of reaching 100 percent primary school coverage by 2015.

Upbeat Conclusions

While FIDEG acknowledges that there’s a long way to go in the war on poverty, the firm’s president, Alejandro Martínez Cuenca, focused on the positives during the presentation of his findings and conclusions.

The Sandinista economist noted that the 7.5 percent reduction in extreme poverty means that 300,000 Nicaraguans have moved out of extreme poverty. He said by investing another $45 million in social programs, the government could eradicate extreme poverty all together.

Martínez also claims that Nicaragua, with an additional $344 million to spend on health, education and social programs, could eliminate poverty all together – challenging the biblical claim that “the poor will always be with us.”

“Yes, it is possible to do,” Martínez said. “But we need consensus so that the efforts are sustainable.”

Post-Survey Spin

Now that FIDEG has clarified the discrepancies over the poverty numbers, both the right and left have started to spin the results to their own political purposes.

The Sandinistas have eagerly taken credit for reducing poverty, while economists who worked for the previous conservative administrations claim the reduction is probably due to the effects of policy decisions made before Ortega returned to power.

Former Central Bank president Mario Arana said the “very significant” drop in extreme poverty levels is “not typical or common,” and therefore raises questions about how sustainable it is. He said part of the explanation might be due to the recent increase in world food prices, which has benefited Nicaragua’s rural poor to a certain extent. Still, Arana called for more “measured analysis” of the data and deeper reflection on the information before leaping to conclusions about what’s happening.

Silvio de Franco, another former Central Bank president, said he is also worried about the sustainability of the poverty reduction –especially because Nicaragua has such a limited capacity to generate new wealth.

“In 1978, we conducted our first survey to measure the informality of Nicaragua’s economy, and the findings were exactly the same as they are now: 70 percent of workers are in the informal economy. In 32 years this hasn’t changed,” De Franco said. “So the possibility of generating wealth and income to sustain increased consumption doesn’t really exist here. We need to generate wealth.”

Oquist, too, seems to have a hard time explaining how, exactly, Ortega’s policies have reduced poverty.

When trying to elaborate on the government’s success, Oquist retreated to rhetoric.

“How can we describe the strategy of poverty reduction of the government of reconciliation and national unity lead by Comandante Daniel Ortega Saavedra? With the recuperation of values of Christianity, Socialism and solidarity. Those are the values,” Oquist said. The presidential advisor also mentioned the importance of “citizen power” and “direct democracy.”

Oquist did, however, admit that the generation of wealth and economic growth is necessary to sustain poverty reduction.

But more importantly, Oquist concluded, Nicaragua needs to continue under the leadership of President Ortega.

In the end, therefore, the Sandinistas appear to be using the poverty survey as an argument to justify their ultimate goal: Ortega’s continuation in power.

Despite a constitutional ban prohibiting Ortega from running for reelection next year, the Sandinistas have been in open campaign for his reelection since he took office in 2007.

“We need a continuity of leadership and policies to accelerate the reduction of poverty,” Oquist said. “We all have to support the programs of Comandante Ortega.”